DEERE & CO 10-Q

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS All amounts are presented in millions of dollars unless otherwise specified. OVERVIEW Organization Deere & Company is a global leader in the production of agricultural, turf, construction, and forestry equipment and solutions. John Deere Financial provides financing for John Deere equipment, parts, services, and other input costs customers need to run their operations. Our operations are managed through the production and precision agriculture (PPA), small agriculture and turf (SAT), construction and forestry (CF), and financial services operating segments. References to “equipment operations” include PPA, SAT, and CF, while references to “agriculture and turf” include both PPA and SAT. Trends and Economic Conditions Industry Sales Outlook for Fiscal Year 2025 Agriculture and Turf Construction and Forestry Company Trends Customers seek to improve profitability, productivity, and sustainability through integrating technology into their operations. Deeper integration of technology into equipment is a persistent market trend. These technologies are incorporated into products within each of our operating segments. We expect this trend to persist for the foreseeable future. Our Smart Industrial Operating Model and Leap Ambitions are intended to capitalize on this market trend. Engaged acres are an indicator we use to understand customer utilization of our technology. We are investing in a Solutions as a Service business model to increase technology adoption and utilization by our customers. Solutions as a Service products did not represent a significant percentage of our revenues. Company Outlook for 2025 Sales volumes are expected to decline in 2025 compared to 2024 due to reduced demand. We are uncertain of the impact potential import tariffs by the U.S. and retaliatory actions taken by other countries could have on our outlook due to the rapidly evolving environment. Agriculture and Turf Outlook for 2025 ● Demand in the U.S. and Canada is expected to decline due to market uncertainty, high interest rates, and elevated used inventory levels, partially offset by the impact of U.S. government subsidies on farm incomes. ● We expect small agricultural equipment sales to be down from 2024 levels in the U.S. and Canada. Strong profitability is anticipated to continue in the dairy and livestock segment as dairy and livestock prices remain elevated; however, this is projected to be more than offset by restrained demand in the turf and compact utility tractor markets amid high interest rates. ● In Europe, the industry is forecasted to be down as farm fundamentals in the region have stabilized at reduced levels as commodity prices have steadied and stronger dairy margins are expected to partially offset continued market uncertainty. Better wheat prices and lower input costs are expected to support increased farm incomes. ● Demand in South America is expected to be flat. In Brazil, improving local commodity prices due to the appreciation of the U.S. dollar against the Brazilian real coupled with strong regional yields and decreasing input costs will offer profitability tailwinds to farmers. Argentina industry sales are forecasted to improve amidst currency stabilization and export tax reductions despite some recent dry weather conditions. ● Industry sales in Asia are forecasted to be down slightly. 24 ​ Construction and Forestry Outlook for 2025 ● Construction equipment industry sales are forecasted to be down in the U.S. and Canada from 2024 levels. The decline is due to further slowdowns in multi-family housing developments and the commercial real estate market and low levels of earthmoving rental purchases, partially offset by high levels of U.S. government infrastructure spending and projected growth in single family housing starts. High interest rates are also expected to further pressure equipment sales as market uncertainty persists. ● Global forestry markets are expected to be flat to down as global markets remain challenged. ● Global roadbuilding markets are forecasted to be generally flat with strong market demand. Financial Services Outlook for 2025 ​ ​ ​ ​ ​ ​ ​ ​ Net Income ​ Up ​ + Prior and current period special items ​ Favorable ​ + Provision for credit losses ​ Favorable ​ (-) Financing spreads ​ Unfavorable ​ Additional Trends Agricultural Market Business Cycle. The agricultural market is affected by various factors including commodity prices, acreage planted, crop yields, government policies, and uncertainty in macroeconomic trends. These factors affect farmers’ income and sentiment which may result in lower demand for equipment. In 2025, we expect to continue experiencing the following effects due to unfavorable market conditions: lower sales volumes, higher sales incentives, and elevated receivable write-offs and expected credit losses. Interest Rates. While interest rates in the U.S. began to decrease in the fourth quarter of 2024, they remain elevated. Higher rates impact us in several ways, primarily affecting the demand for our products and financing spreads for the financial services operations. The markets for our agriculture, turf, and construction products are negatively impacted by elevated interest rates and their effect on borrowing costs for our customers . Foreign Exchange Rates. During the first quarter of 2025, the U.S. dollar strengthened against the primary currencies in which we conduct business overseas. A stronger U.S. dollar is expected to have an unfavorable impact on our fiscal year 2025 financial results. We utilize foreign currency derivatives that are not designated to mitigate the impact of currency fluctuations on our cash flow, which resulted in favorable foreign exchange gains for the quarter. These derivatives are limited in duration, leaving us exposed to the long-term impact of currency fluctuations on income. Changes in the agricultural market business cycle, interest rates, and foreign exchange rates are driven by factors outside of our control, and as a result we cannot reasonably foresee when these conditions will fully subside. Legal Proceeding – On January 15, 2025, the Federal Trade Commission (FTC), along with the Attorneys General of the States of Illinois and Minnesota filed a lawsuit against us in the United States District Court for the Northern District of Illinois Western Division. The Attorneys General of the States of Arizona, Michigan, and Wisconsin have since joined the lawsuit. The lawsuit alleges monopolization and unfair competition in violation of federal and state antitrust laws. Plaintiffs seek a permanent injunction and other equitable relief to allow owners of our equipment, as well as independent repair providers, access to our repair tools and any other repair resources available to authorized John Deere dealers. At this stage, we are unable to estimate the potential impact on our business. Other Items of Concern and Uncertainties – Other items that could impact our results are: ● global and regional political conditions, including the ongoing war between Russia and Ukraine and the conflicts in the Middle East ● shifts in energy, economic, tax, trade policies, and positions on government subsidies of farming ● new or retaliatory tariffs ● capital market disruptions ● foreign currency and capital control policies ● right to repair regulations and legislation ● weather conditions ● marketplace adoption and monetization of technologies we have invested in ● our ability to strengthen our digital capabilities, automation, autonomy, and alternative power technologies ● changes in demand and pricing for new and used equipment ● delays or disruptions in our supply chain ● significant fluctuations in foreign currency exchange rates ● volatility in the prices of many commodities ● slower economic growth 25 ​ consolidated results – 2025 Compared with 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Deere & Company ​ January 26 ​ January 28 ​ (In millions of dollars, except per share amounts) ​ 2025 ​ 2024 ​ Net sales and revenues ​ $ 8,508 ​ $ 12,185 ​ Net income attributable to Deere & Company ​ ​ 869 ​ ​ 1,751 ​ Diluted earnings per share ​ ​ 3.19 ​ ​ 6.23 ​ ​ Net sales and revenues decreased for the quarter primarily due to lower sales volumes. Net income and diluted EPS decreased driven by lower sales. The discussion of net sales and operating profit is included in the Business Segment Results below. Net income was impacted by special items. See Note 20 for additional details. An explanation of the cost of sales to net sales ratio and other significant statement of consolidated income changes follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ January 26 ​ January 28 ​ ​ ​ Deere & Company ​ 2025 ​ 2024 ​ % Change ​ Cost of sales to net sales ​ ​ 74.0% ​ ​ 68.7% ​ ​ ​ (-) Overhead costs ​ ​ ​ ​ ​ ​ ​ Unfavorable ​ (+) Material costs ​ ​ ​ ​ ​ ​ ​ Favorable ​ Increased mostly due to higher overhead costs from reduced volumes resulting in production inefficiencies, partially offset by lower material costs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income ​ $ 246 ​ $ 339 ​ -27 ​ Lower due to reduced international mutual funds investment income and lower service revenues and miscellaneous income. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development expenses ​ ​ 526 ​ ​ 533 ​ -1 ​ Largely unchanged due to continued focus on developing and deploying technology solutions. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, administrative and general expenses ​ ​ 972 ​ ​ 1,066 ​ -9 ​ Decreased mostly due to lower employee profit-sharing incentives and the favorable impact of reduced valuation allowance on "Assets held for sale" of Banco John Deere S.A. (see Note 20), partially offset by a higher provision for credit losses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ 829 ​ ​ 802 ​ +3 ​ Increased primarily due to higher average borrowing rates and higher average borrowings. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other operating expenses ​ ​ 249 ​ ​ 369 ​ -33 ​ Decreased due to current period foreign exchange gains and prior period foreign exchange losses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ ​ 27 ​ ​ 469 ​ -94 ​ Decreased as a result of lower pretax income and the favorable impact of discrete tax adjustments (see Note 20). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 26 ​ Business Segment Results – 2025 compared with 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ January 26 ​ January 28 ​ ​ ​ Production and Precision Agriculture 2025 2024 % Change ​ Net sales ​ $ 3,067 ​ $ 4,849 ​ -37 ​ Operating profit ​ ​ 338 ​ ​ 1,045 ​ -68 ​ Operating margin ​ ​ 11.0% ​ ​ 21.6% ​ ​ ​ Price realization ​ ​ ​ ​ ​ ​ ​ +1 ​ Currency translation impact on Net sales ​ ​ ​ ​ ​ ​ ​ -3 ​ Production and precision agriculture sales decreased for the quarter as a result of lower shipment volumes (primarily in the U.S., Canada, and Europe) driven by overall market uncertainty. Operating profit decreased primarily due to lower shipment volumes, partially offset by lower selling, administrative and general expenses and research and development expenses driven by a decrease in employee profit-sharing incentives, decreased production costs from lower material costs, and price realization. Production & Precision Agriculture Operating Profit First Quarter 2025 Compared to First Quarter 2024 ​ 27 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ January 26 ​ January 28 ​ ​ ​ Small Agriculture and Turf 2025 2024 % Change ​ Net sales ​ $ 1,748 ​ $ 2,425 ​ -28 ​ Operating profit ​ ​ 124 ​ ​ 326 ​ -62 ​ Operating margin ​ ​ 7.1% ​ ​ 13.4% ​ ​ ​ Price realization ​ ​ ​ ​ ​ ​ ​ +1 ​ Currency translation impact on Net sales ​ ​ ​ ​ ​ ​ ​ -1 ​ ​ Small agriculture and turf sales decreased for the quarter due to lower shipment volumes (primarily in the U.S., Canada, and Europe) driven mainly by market uncertainty and high interest rates. Operating profit decreased primarily as a result of lower shipment volumes partially offset by lower production costs, driven by a decrease in material costs and employee profit-sharing incentives. Small Agriculture & Turf Operating Profit First Quarter 2025 Compared to First Quarter 2024 ​ 28 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ January 26 ​ January 28 ​ ​ ​ Construction and Forestry 2025 2024 % Change ​ Net sales ​ $ 1,994 ​ $ 3,212 ​ -38 ​ Operating profit ​ ​ 65 ​ ​ 566 ​ -89 ​ Operating margin ​ ​ 3.3% ​ ​ 17.6% ​ ​ ​ Price realization ​ ​ ​ ​ ​ ​ ​ -1 ​ Currency translation impact on Net sales ​ ​ ​ ​ ​ ​ ​ -1 ​ ​ Construction and forestry sales were lower for the quarter due to decreased U.S. shipment volumes, driven by planned underproduction efforts to reduce field inventory and competitive pressures. Operating profit decreased primarily due to lower shipment volumes, unfavorable price realization, and higher selling, administrative and general expenses in part due to marketing events. Construction & Forestry Operating Profit First Quarter 2025 Compared to First Quarter 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ January 26 ​ January 28 ​ ​ ​ Financial Services ​ 2025 ​ 2024 ​ % Change ​ Revenue (including intercompany) ​ $ 1,573 ​ $ 1,552 ​ +1 ​ Interest expense ​ ​ 766 ​ ​ 762 ​ +1 ​ Net income ​ ​ 230 ​ ​ 207 ​ +11 ​ ​ The average balance of receivables and leases financed was 3% lower in the first three months of 2025, compared with the same period last year, primarily due to the reclassification of the assets of Banco John Deere S.A. (BJD) to “Assets held for sale” (see Note 20). Excluding the impact of this reclassification, revenue increased due to higher average portfolio balances and financing rates. Net income for the quarter was affected by the decreased valuation allowance on BJD “Assets held for sale” (see Note 20). Excluding the impact of this special item, net income decreased due to a higher provision for credit losses, partially offset by lower selling, administrative and general expenses. ​ 29 ​ Critical Accounting Estimates See our critical accounting estimates discussed in the Management’s Discussion and Analysis of the most recently filed Annual Report on Form 10-K. There have been no material changes to these policies. CAPITAL RESOURCES AND LIQUIDITY – 2025 compared with 2024 We have access to global markets at a reasonable cost. Sources of liquidity include: ● cash, cash equivalents, and marketable securities on hand ● funds from operations ● the issuance of commercial paper and term debt ● the securitization of retail notes ● bank lines of credit We closely monitor our cash requirements. Based on the available sources of liquidity, we expect to meet our funding needs in the short term (next 12 months) and long term (beyond 12 months). We are forecasting lower operating cash flows from equipment operations in 2025 compared with 2024 driven by a decrease in net income adjusted for non-cash provisions and a lower reduction in inventories in 2025 compared with prior period. We operate in multiple industries, which have unique funding requirements. The equipment operations are capital intensive. Historically, these operations have been subject to seasonal variations in financing requirements for inventories and receivables from dealers. The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios. BJD assets and liabilities were reclassified to held for sale in the third quarter of 2024 and maintain that classification in the first quarter of 2025 (see Note 20); they are not included within balances at year-end 2024 or at the end of the first quarter of 2025. Key metrics are provided in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 26 ​ October 27 ​ January 28 ​ ​ ​ 2025 ​ 2024 ​ 2024 ​ Cash, cash equivalents, and marketable securities ​ $ 7,815 ​ $ 8,478 ​ $ 6,273 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Trade accounts and notes receivable – net ​ ​ 4,931 ​ ​ 5,326 ​ ​ 7,795 ​ Ratio to prior 12 month’s net sales ​ ​ 12% ​ ​ 12% ​ ​ 14% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventories ​ ​ 7,744 ​ ​ 7,093 ​ ​ 8,937 ​ Ratio to prior 12 month’s cost of sales ​ ​ 27% ​ ​ 23% ​ ​ 24% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unused credit lines ​ ​ 7,793 ​ ​ 6,474 ​ ​ 1,577 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial Services: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratio of interest-bearing debt to stockholder’s equity ​ ​ 7.6 to 1 ​ ​ 8.1 to 1 ​ ​ 8.3 to 1 ​ The increase in unused credit lines at January 26, 2025 compared to October 27, 2024 relates to a decrease in commercial paper outstanding. There have been no material changes to the contractual obligations and other cash requirements identified in our most recently filed Annual Report on Form 10-K. Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ January 26 ​ January 28 ​ ​ 2025 2024 Net cash used for operating activities ​ $ (1,132) ​ $ (908) ​ Net cash provided by investing activities ​ ​ 1,416 ​ ​ 1,217 ​ Net cash used for financing activities ​ ​ (923) ​ ​ (2,645) ​ Effect of exchange rate changes on cash, cash equivalents, and restricted cash ​ ​ (87) ​ ​ 16 ​ Net decrease in cash, cash equivalents, and restricted cash ​ $ (726) ​ $ (2,320) ​ Cash outflows from consolidated operating activities in the first three months of 2025 were $1,132. This resulted mainly from the payout of employee profit-sharing incentives, an increase in inventories, and a reduction in dealer sales incentive accruals, partially offset by net income adjusted for non-cash provisions. Cash inflows from investing activities were $1,416 in the first three months of this year. The primary drivers were collections of receivables 30 ​ (excluding receivables related to sales) exceeding the cost of receivables acquired, partially offset by purchases of property and equipment and a change in collateral on derivatives – net. Cash outflows from financing activities were $923 in the first three months of 2025 due to repurchases of common stock, dividends paid, and lower borrowings. Cash returned to shareholders was $844 in the first three months of 2025. Cash, cash equivalents, and restricted cash decreased $726 during the first three months of this year. Key Metrics and Balance Sheet Changes Trade Accounts and Notes Receivable. Trade accounts and notes receivable arise from sales of goods to customers. Trade receivables decreased $395 during the first three months of 2025, and decreased $2,864 compared to a year ago, both due to lower sales. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 6% at January 26, 2025, 6% at October 27, 2024, and 1% at January 28, 2024. Financing Receivables and Equipment on Operating Leases. Financing receivables and equipment on operating leases consist of retail notes originated in connection with financing of new and used equipment, operating leases, revolving charge accounts, sales-type and direct financing leases, and wholesale notes. Financing receivables and equipment on operating leases decreased $3,673 during the first quarter of 2025, primarily due to seasonal payments and lower retail customer receivables and dealer inventories, and decreased $49 in the past 12 months due to reclassification of BJD financing receivables as “Assets held for sale.” Excluding this, financing receivables increased $2,622 due to increased dealer inventories and retail customer receivables. Total acquisition volumes of financing receivables and equipment on operating leases were 22% lower in the first three months of 2025, compared with the same period last year, as volumes of wholesale notes, retail notes, and operating leases were lower, while revolving charge accounts were higher compared to the same period last year. Inventories. Inventories increased by $651 during the first three months, primarily due to a seasonal increase. Inventories decreased $1,193 compared to a year ago due to lower forecasted demand and inventory management efforts. A majority of these inventories are valued on the last-in, first-out (LIFO) method. Property and Equipment . Property and equipment cash expenditures in the first three months of 2025 were $352, compared with $362 in the same period last year. Capital expenditures in 2025 are estimated to be approximately $1,600. Accounts Payable and Accrued Expenses. Accounts payable and accrued expenses decreased by $2,381 in the first three months of 2025, primarily due to a decrease in accrued expenses associated with employee benefits, dealer sales discounts, and taxes. Accounts payable and accrued expenses decreased $1,199 compared to a year ago, due to a decrease in accounts payable associated with trade payables and a decrease in accrued expenses associated with employee benefits. Borrowings. Total external borrowings decreased by $812 in the first three months of 2025 and increased $1,215 compared to a year ago, generally corresponding with the level of the receivable and lease portfolio, as well as other working capital requirements. John Deere Capital Corporation (Capital Corporation), a U.S. financial services subsidiary, has a revolving warehouse facility to utilize bank conduit facilities to securitize retail notes (see Note 9). The facility was renewed in November 2024 with an expiration in November 2025 and with an increase in the total capacity or “financing limit” from $2,000 to $2,500. At January 26, 2025, $1,917 of securitization borrowings were outstanding under the facility. At the end of the contractual revolving period, unless the banks and Capital Corporation agree to renew, Capital Corporation would liquidate the secured borrowings over time as payments on the retail notes are collected. In the first three months of 2025, the financial services operations issued $725 and retired $1,145 of retail note securitization borrowings, which are presented in “Net proceeds (payments) in total short-term borrowings (original maturities three months or less).” Lines of Credit. We also have access to bank lines of credit with various banks throughout the world. Worldwide lines of credit totaled $11,061 at January 26, 2025, consisting primarily of: ● a 364-day credit facility agreement of $5,000 expiring in the second quarter of 2025 ● a credit facility agreement of $2,750 expiring in the second quarter of 2028 ● a credit facility agreement of $2,750 expiring in the second quarter of 2029 At January 26, 2025, $7,793 of these worldwide lines of credit were unused. For the purpose of computing unused credit lines, commercial paper and short-term bank borrowings were considered to constitute utilization. These credit agreements require Capital Corporation and other parts of our business to maintain certain performance metrics and liquidity targets. All requirements in the credit agreements have been met during the periods included in the financial statements. 31 ​ Debt Ratings . To access public debt capital markets, we rely on credit rating agencies to assign short-term and long-term credit ratings to our debt securities as an indicator of credit quality for fixed income investors. A security rating is not a recommendation by the rating agency to buy, sell, or hold our securities. A credit rating agency may change or withdraw ratings based on its assessment of our current and future ability to meet interest and principal repayment obligations. Each agency’s rating should be evaluated independently of any other rating. Lower credit ratings generally result in higher borrowing costs, including costs of derivative transactions, reduced access to debt capital markets, and may adversely impact our liquidity. The senior long-term and short-term debt ratings and outlook currently assigned to unsecured company securities by the rating agencies engaged by us are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Senior ​ ​ ​ ​ Long-Term ​ Short-Term ​ Outlook Fitch Ratings ​ A+ ​ F1 ​ Stable ​ Moody’s Investors Service, Inc. A1 Prime-1 Stable ​ Standard & Poor’s A A-1 Stable ​ ​ FORWARD-LOOKING STATEMENTS Certain statements contained herein, including in the sections entitled “Overview” and “Condensed Notes to Interim Consolidated Financial Statements” relating to future events, expectations, and trends constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 and involve factors that are subject to change, assumptions, risks, and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect all lines of our operations generally while others could more heavily affect a particular line of business. Forward-looking statements are based on currently available information and current assumptions, expectations, and projections about future events and should not be relied upon. Except as required by law, we expressly disclaim any obligation to update or revise our forward-looking statements. Many factors, risks, and uncertainties could cause actual results to differ materially from these forward-looking statements. Among these factors are risks related to: ​ ● the agricultural business cycle, which can be unpredictable and is affected by factors such as world grain stocks, harvest yields, available farm acres, acreage planted, soil conditions, prices for commodities and livestock, input costs, availability of transport for crops as well as adverse macroeconomic conditions, including unemployment, inflation, interest rate volatility, changes in consumer practices due to slower economic growth, ability to export commodities, and regional or global liquidity constraints; ● government policies and actions in respect to global trade, tariffs and trade agreements, and energy, and the uncertainty of our ability to sell products domestically or internationally, continue production at certain international facilities, procure raw materials and components, accurately forecast demand and inventory, manage increased costs of production, absorb or pass on increased pricing, predict financial results, and remain competitive based on these actions and policies; ● higher interest rates and currency fluctuations which could adversely affect the U.S. dollar, customer confidence, access to capital, and demand for our products and solutions; ● our ability to adapt in highly competitive markets, including understanding and meeting customers’ changing expectations for products and solutions, including delivery and utilization of precision technology; ● housing starts and supply, real estate and housing prices, levels of public and non-residential construction, and infrastructure investment; ● political, economic, and social instability of the geographies in which we operate, including the ongoing war between Russia and Ukraine and the conflicts in the Middle East; ● worldwide demand for food and different forms of renewable energy impacting the price of farm commodities and consequently the demand for our equipment; ● investigations, claims, lawsuits, or other legal proceedings, including the recent lawsuit filed by the FTC and the Attorneys General of the States of Arizona, Illinois, Michigan, Minnesota, and Wisconsin alleging that we unlawfully withheld self-repair capabilities from farmers and independent repair providers; ● changes in climate patterns, unfavorable weather events, and natural disasters, including potential consequences from the recent California wildfires; ● availability and price of raw materials, components, and whole goods; ● delays or disruptions in our supply chain; ● suppliers’ and manufacturers’ business practices and compliance with applicable laws such as human rights, safety, environmental, and fair wages; ● loss of or challenges to intellectual property rights; ● rationalization, restructuring, relocation, expansion, and/or reconfiguration of manufacturing and warehouse facilities; ● the ability to execute business strategies, including our Smart Industrial Operating Model and Leap Ambitions; 32 ​ ● accurately forecasting customer demand for products and services and adequately managing inventory; ● dealer practices and their ability to manage inventory and distribution of our products and to provide support and service for precision technology solutions; ● the ability to realize anticipated benefits of acquisitions and joint ventures, including challenges with successfully integrating operations and internal control processes; ● negative claims or publicity that damage our reputation or brand; ● the ability to attract, develop, engage, and retain qualified employees; ● the impact of workforce reductions on company culture, employee retention and morale, and institutional knowledge; ● labor relations and contracts, including work stoppages and other disruptions; ● security breaches, cybersecurity attacks, technology failures, and other disruptions to our information technology infrastructure and products; ● leveraging artificial intelligence and machine learning within our business processes; ● changes to governmental communications channels (radio frequency technology); ● changes to existing laws and regulations, including the implementation of new, more stringent laws, as well as compliance with a variety of U.S., foreign, and international laws, regulations, and policies relating to, but not limited to the following: advertising, anti-bribery and anti-corruption, anti-money laundering, antitrust, consumer finance, cybersecurity, data privacy, encryption, environmental (including climate change and engine emissions), farming, health, and safety, foreign exchange controls and cash repatriation restrictions, foreign ownership and investment, human rights, import / export and trade, tariffs, labor and employment, product liability, telematics, and telecommunications; ● governmental and other actions designed to address climate change in connection with a transition to a lower-carbon economy; and ● warranty claims, post-sales repairs or recalls, product liability litigation, and regulatory investigations as a result of the deficient operation of our products. Further information concerning us and our businesses, including factors that could materially affect our financial results, is included in our other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. “Risk Factors” of our most recent Annual Report on Form 10-K and this Quarterly Report on Form 10-Q). There also may be other factors that we cannot anticipate or that are not described herein because we do not currently perceive them to be material. ​ SUPPLEMENTAL CONSOLIDATING DATA The supplemental consolidating data presented on the subsequent pages is presented for informational purposes. Equipment operations represent the enterprise without financial services. Equipment operations include production and precision agriculture operations, small agriculture and turf operations, construction and forestry operations, and other corporate assets, liabilities, revenues, and expenses not reflected within financial services. Transactions between the equipment operations and financial services have been eliminated to arrive at the consolidated financial statements. Equipment operations and financial services participate in different industries. Equipment operations primarily generate earnings and cash flows by manufacturing and selling equipment, service parts, and technology solutions to dealers and retail customers. Financial services finance sales and leases by dealers of new and used equipment that is largely manufactured by equipment operations. Those earnings and cash flows generally are the difference between the finance income received from customer payments less interest expense, and depreciation on equipment subject to an operating lease. The two businesses are capitalized differently and have separate performance metrics. The supplemental consolidating data is also used by management due to these differences. ​ 33 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DEERE & COMPANY ​ ​ SUPPLEMENTAL CONSOLIDATING DATA ​ ​ STATEMENTS OF INCOME ​ ​ For the Three Months Ended January 26, 2025 and January 28, 2024 ​ ​ Unaudited ​ ​ ​ ​ EQUIPMENT ​ FINANCIAL ​ ​ ​ ​ ​ ​ ​ ​ OPERATIONS ​ SERVICES ​ ELIMINATIONS ​ CONSOLIDATED ​ ​ ​ 2025 ​ 2024 ​ 2025 ​ 2024 ​ 2025 ​ 2024 ​ 2025 ​ 2024 ​ Net Sales and Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 6,809 ​ $ 10,486 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 6,809 ​ $ 10,486 ​ ​ Finance and interest income ​ ​ 110 ​ 157 ​ $ 1,455 ​ $ 1,433 ​ $ (112) ​ $ (230) ​ ​ 1,453 ​ ​ 1,360 1 ​ ​ Other income ​ ​ 202 ​ 289 ​ ​ 118 ​ 119 ​ ​ (74) ​ (69) ​ ​ 246 ​ 339 2, 3, 4 ​ ​ Total ​ ​ 7,121 ​ 10,932 ​ ​ 1,573 ​ 1,552 ​ ​ (186) ​ (299) ​ ​ 8,508 ​ 12,185 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs and Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales ​ ​ 5,045 ​ 7,207 ​ ​ ​ ​ ​ ​ ​ ​ (8) ​ ​ (7) ​ ​ 5,037 ​ ​ 7,200 4 ​ ​ Research and development expenses ​ ​ 526 ​ 533 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 526 ​ ​ 533 ​ ​ Selling, administrative and general expenses ​ ​ 800 ​ 876 ​ ​ 174 ​ 192 ​ ​ (2) ​ (2) ​ ​ 972 ​ 1,066 4 ​ ​ Interest expense ​ ​ 84 ​ 108 ​ ​ 766 ​ 762 ​ ​ (21) ​ (68) ​ ​ 829 ​ 802 1 ​ ​ Interest compensation to Financial Services ​ ​ 91 ​ 162 ​ ​ ​ ​ ​ ​ ​ ​ (91) ​ ​ (162) ​ ​ ​ ​ ​ ​ 1 ​ ​ Other operating expenses ​ ​ (51) ​ 90 ​ ​ 364 ​ 339 ​ ​ (64) ​ (60) ​ ​ 249 ​ 369 3, 4, 5 ​ ​ Total ​ ​ 6,495 ​ 8,976 ​ ​ 1,304 ​ 1,293 ​ ​ (186) ​ (299) ​ ​ 7,613 ​ 9,970 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before Income Taxes ​ ​ 626 ​ 1,956 ​ ​ 269 ​ 259 ​ ​ ​ ​ ​ ​ ​ 895 ​ 2,215 ​ ​ Provision (credit) for income taxes ​ ​ (13) ​ 416 ​ ​ 40 ​ 53 ​ ​ ​ ​ ​ ​ ​ 27 ​ 469 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income after Income Taxes ​ ​ 639 ​ 1,540 ​ ​ 229 ​ 206 ​ ​ ​ ​ ​ ​ ​ 868 ​ 1,746 ​ ​ Equity in income (loss) of unconsolidated affiliates ​ ​ (2) ​ 1 ​ ​ 1 ​ ​ 1 ​ ​ ​ ​ ​ ​ ​ ​ (1) ​ ​ 2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income ​ ​ 637 ​ 1,541 ​ ​ 230 ​ 207 ​ ​ ​ ​ ​ ​ ​ 867 ​ 1,748 ​ ​ Less: Net loss attributable to noncontrolling interests ​ ​ (2) ​ (3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (2) ​ ​ (3) ​ ​ Net Income Attributable to Deere & Company ​ $ 639 ​ $ 1,544 ​ $ 230 ​ $ 207 ​ ​ ​ ​ ​ ​ ​ $ 869 ​ $ 1,751 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 Elimination of intercompany interest income and expense. 2 Elimination of equipment operations’ margin from inventory transferred to equipment on operating leases. 3 Elimination of income and expenses between equipment operations and financial services related to intercompany guarantees of investments in certain international markets. 4 Elimination of intercompany service revenues and fees. 5 Elimination of financial services’ lease depreciation expense related to inventory transferred to equipment on operating leases. ​ ​ 34 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DEERE & COMPANY ​ ​ SUPPLEMENTAL CONSOLIDATING DATA (Continued) ​ ​ CONDENSED BALANCE SHEETS ​ ​ Unaudited ​ ​ ​ ​ EQUIPMENT ​ FINANCIAL ​ ​ ​ ​ ​ ​ ​ ​ OPERATIONS ​ SERVICES ​ ELIMINATIONS ​ CONSOLIDATED ​ ​ ​ Jan 26 ​ Oct 27 ​ Jan 28 ​ Jan 26 ​ Oct 27 ​ Jan 28 ​ Jan 26 ​ Oct 27 ​ Jan 28 ​ Jan 26 ​ Oct 27 ​ Jan 28 ​ ​ ​ 2025 ​ 2024 ​ 2024 ​ 2025 ​ 2024 ​ 2024 ​ 2025 ​ 2024 ​ 2024 ​ 2025 ​ 2024 ​ 2024 ​ Assets ​ ​ ​ Cash and cash equivalents ​ $ 4,840 ​ $ 5,615 ​ $ 3,467 ​ $ 1,761 ​ $ 1,709 ​ $ 1,670 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 6,601 ​ $ 7,324 ​ $ 5,137 ​ ​ Marketable securities ​ ​ 114 ​ 125 ​ 147 ​ ​ 1,100 ​ 1,029 ​ 989 ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,214 ​ 1,154 ​ 1,136 ​ ​ Receivables from Financial Services ​ ​ 1,826 ​ 3,043 ​ 4,296 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ (1,826) ​ $ (3,043) ​ $ (4,296) ​ ​ ​ ​ ​ ​ ​ ​ ​ 6 ​ ​ Trade accounts and notes receivable – net ​ ​ 1,053 ​ 1,257 ​ 1,093 ​ ​ 5,812 ​ 6,225 ​ 9,167 ​ ​ (1,934) ​ (2,156) ​ (2,465) ​ ​ 4,931 ​ 5,326 ​ 7,795 7 ​ ​ Financing receivables – net ​ ​ 78 ​ 78 ​ 72 ​ ​ 41,318 ​ 44,231 ​ 43,636 ​ ​ ​ ​ ​ ​ ​ ​ ​ 41,396 ​ 44,309 ​ 43,708 ​ ​ Financing receivables securitized – net ​ ​ 2 ​ ​ 2 ​ ​ ​ ​ ​ 8,255 ​ 8,721 ​ 6,400 ​ ​ ​ ​ ​ ​ ​ ​ ​ 8,257 ​ 8,723 ​ 6,400 ​ ​ Other receivables ​ ​ 2,367 ​ 2,193 ​ 1,515 ​ ​ 654 ​ 427 ​ 559 ​ ​ (42) ​ (75) ​ (57) ​ ​ 2,979 ​ 2,545 ​ 2,017 7 ​ ​ Equipment on operating leases – net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,157 ​ 7,451 ​ 6,751 ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,157 ​ 7,451 ​ 6,751 ​ ​ Inventories ​ ​ 7,744 ​ 7,093 ​ 8,937 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,744 ​ ​ 7,093 ​ ​ 8,937 ​ ​ Property and equipment – net ​ ​ 7,392 ​ 7,546 ​ 6,879 ​ ​ 33 ​ 34 ​ 35 ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,425 ​ 7,580 ​ 6,914 ​ ​ Goodwill ​ ​ 3,872 ​ 3,959 ​ 3,966 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,872 ​ ​ 3,959 ​ ​ 3,966 ​ ​ Other intangible assets – net ​ ​ 937 ​ 999 ​ 1,112 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 937 ​ 999 ​ 1,112 ​ ​ Retirement benefits ​ ​ 2,933 ​ 2,839 ​ 3,013 ​ ​ 86 ​ 83 ​ 75 ​ ​ (1) ​ (1) ​ (1) ​ ​ 3,018 ​ 2,921 ​ 3,087 8 ​ ​ Deferred income taxes ​ ​ 2,247 ​ 2,262 ​ 2,133 ​ ​ 42 ​ 43 ​ 72 ​ ​ (437) ​ (219) ​ (372) ​ ​ 1,852 ​ 2,086 ​ 1,833 9 ​ ​ Other assets ​ ​ 2,295 ​ 2,194 ​ 2,058 ​ ​ 539 ​ 715 ​ 546 ​ ​ (27) ​ (3) ​ (26) ​ ​ 2,807 ​ 2,906 ​ 2,578 ​ ​ Assets held for sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,929 ​ ​ 2,944 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,929 ​ ​ 2,944 ​ ​ ​ ​ ​ Total Assets ​ $ 37,700 ​ $ 39,205 ​ $ 38,688 ​ $ 69,686 ​ $ 73,612 ​ $ 69,900 ​ $ (4,267) ​ $ (5,497) ​ $ (7,217) ​ $ 103,119 ​ $ 107,320 ​ $ 101,371 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term borrowings ​ $ 1,101 ​ $ 911 ​ $ 1,203 ​ $ 11,710 ​ $ 12,622 ​ $ 15,914 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 12,811 ​ $ 13,533 ​ $ 17,117 ​ ​ Short-term securitization borrowings ​ ​ 1 ​ ​ 2 ​ ​ ​ ​ ​ 8,013 ​ 8,429 ​ 6,116 ​ ​ ​ ​ ​ ​ ​ ​ ​ 8,014 ​ 8,431 ​ 6,116 ​ ​ Payables to Equipment Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,826 ​ 3,043 ​ 4,296 ​ $ (1,826) ​ $ (3,043) ​ $ (4,296) ​ ​ ​ ​ ​ ​ ​ 6 ​ ​ Accounts payable and accrued expenses ​ ​ 10,869 ​ 13,534 ​ 12,677 ​ ​ 3,296 ​ 3,243 ​ 3,232 ​ ​ (2,003) ​ (2,234) ​ (2,548) ​ ​ 12,162 ​ 14,543 ​ 13,361 7 ​ ​ Deferred income taxes ​ ​ 405 ​ 434 ​ 478 ​ ​ 480 ​ 263 ​ 444 ​ ​ (437) ​ (219) ​ (372) ​ ​ 448 ​ 478 ​ 550 9 ​ ​ Long-term borrowings ​ ​ 8,507 ​ 6,603 ​ 7,270 ​ ​ 35,049 ​ 36,626 ​ 32,663 ​ ​ ​ ​ ​ ​ ​ ​ ​ 43,556 ​ 43,229 ​ 39,933 ​ ​ Retirement benefits and other liabilities ​ ​ 1,668 ​ 2,250 ​ 2,006 ​ ​ 67 ​ 105 ​ 110 ​ ​ (1) ​ (1) ​ (1) ​ ​ 1,734 ​ 2,354 ​ 2,115 8 ​ ​ Liabilities held for sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,830 ​ ​ 1,827 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,830 ​ ​ 1,827 ​ ​ ​ ​ ​ Total liabilities ​ ​ 22,551 ​ ​ 23,734 ​ ​ 23,634 ​ ​ 62,271 ​ ​ 66,158 ​ ​ 62,775 ​ ​ (4,267) ​ ​ (5,497) ​ ​ (7,217) ​ ​ 80,555 ​ ​ 84,395 ​ ​ 79,192 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (Note 16) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Redeemable noncontrolling interest ​ ​ 78 ​ ​ 82 ​ ​ 100 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 78 ​ ​ 82 ​ ​ 100 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Deere & Company stockholders’ equity ​ ​ 22,479 ​ 22,836 ​ 22,075 ​ ​ 7,415 ​ ​ 7,454 ​ ​ 7,125 ​ ​ (7,415) ​ ​ (7,454) ​ ​ (7,125) ​ ​ 22,479 ​ ​ 22,836 ​ ​ 22,075 10 ​ ​ Noncontrolling interests ​ ​ 7 ​ 7 ​ 4 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7 ​ ​ 7 ​ ​ 4 ​ ​ Financial Services’ equity ​ ​ (7,415) ​ ​ (7,454) ​ ​ (7,125) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,415 ​ ​ 7,454 ​ ​ 7,125 ​ ​ ​ ​ ​ ​ ​ ​ ​ 10 ​ ​ Adjusted total stockholders’ equity ​ ​ 15,071 ​ 15,389 ​ 14,954 ​ ​ 7,415 ​ 7,454 ​ 7,125 ​ ​ ​ ​ ​ ​ ​ ​ ​ 22,486 ​ 22,843 ​ 22,079 ​ ​ Total Liabilities and Stockholders’ Equity ​ $ 37,700 ​ $ 39,205 ​ $ 38,688 ​ $ 69,686 ​ $ 73,612 ​ $ 69,900 ​ $ (4,267) ​ $ (5,497) ​ $ (7,217) ​ $ 103,119 ​ $ 107,320 ​ $ 101,371 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 6 Elimination of receivables / payables between equipment operations and financial services. 7 Primarily reclassification of sales incentive accruals on receivables sold to financial services. 8 Reclassification of net pension assets / liabilities. 9 Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions. 10 Elimination of financial services’ equity. 35 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DEERE & COMPANY ​ ​ SUPPLEMENTAL CONSOLIDATING DATA (Continued) ​ ​ STATEMENTS OF CASH FLOWS ​ ​ For the Three Months Ended January 26, 2025 and January 28, 2024 ​ ​ Unaudited ​ ​ ​ ​ EQUIPMENT ​ FINANCIAL ​ ​ ​ ​ ​ ​ ​ ​ OPERATIONS ​ SERVICES ​ ELIMINATIONS ​ CONSOLIDATED ​ ​ ​ ​ 2025 ​ 2024 ​ 2025 ​ 2024 ​ 2025 ​ 2024 ​ 2025 ​ 2024 ​ ​ Cash Flows from Operating Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 637 ​ $ 1,541 ​ $ 230 ​ $ 207 ​ ​ ​ ​ ​ ​ ​ $ 867 ​ $ 1,748 ​ ​ Adjustments to reconcile net income to net cash provided by (used for) operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision (credit) for credit losses ​ 3 ​ (2) ​ 66 ​ 33 ​ ​ ​ ​ ​ 69 ​ 31 ​ ​ Provision for depreciation and amortization ​ 319 ​ 302 ​ 265 ​ 254 ​ $ (35) ​ $ (36) ​ 549 ​ 520 11 ​ ​ Impairments and other adjustments ​ ​ ​ ​ ​ ​ ​ (32) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (32) ​ ​ ​ ​ ​ Share-based compensation expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 28 ​ ​ 46 ​ ​ 28 ​ ​ 46 12 ​ ​ Distributed earnings of Financial Services ​ 162 ​ 233 ​ ​ ​ ​ ​ (162) ​ (233) ​ ​ ​ ​ 13 ​ ​ Provision (credit) for deferred income taxes ​ (17) ​ 48 ​ 225 ​ (21) ​ ​ ​ ​ ​ 208 ​ 27 ​ ​ Changes in assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Receivables related to sales ​ 140 ​ 209 ​ ​ ​ ​ ​ ​ ​ ​ 923 ​ ​ (486) ​ ​ 1,063 ​ ​ (277) 14, 16 ​ ​ Inventories ​ (784) ​ (687) ​ ​ ​ ​ ​ ​ ​ ​ (11) ​ ​ (36) ​ ​ (795) ​ ​ (723) 15 ​ ​ Accounts payable and accrued expenses ​ (2,073) ​ (2,155) ​ 6 ​ 25 ​ 222 ​ (197) ​ (1,845) ​ (2,327) 16 ​ ​ Accrued income taxes payable/receivable ​ (479) ​ 165 ​ (61) ​ 18 ​ ​ ​ ​ ​ (540) ​ 183 ​ ​ Retirement benefits ​ (647) ​ (127) ​ (41) ​ (2) ​ ​ ​ ​ ​ (688) ​ (129) ​ ​ Other ​ (136) ​ (46) ​ 117 ​ 61 ​ 3 ​ (22) ​ (16) ​ (7) 11, 12, 15 ​ ​ Net cash provided by (used for) operating activities ​ (2,875) ​ (519) ​ 775 ​ 575 ​ 968 ​ (964) ​ (1,132) ​ (908) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Flows from Investing Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Collections of receivables (excluding receivables related to sales) ​ ​ ​ ​ ​ ​ ​ 8,345 ​ 8,007 ​ (208) ​ (255) ​ 8,137 ​ 7,752 14 ​ ​ Proceeds from maturities and sales of marketable securities ​ ​ 9 ​ ​ 72 ​ 52 ​ 112 ​ ​ ​ ​ ​ 61 ​ 184 ​ ​ Proceeds from sales of equipment on operating leases ​ ​ ​ ​ ​ ​ ​ ​ 433 ​ ​ 506 ​ ​ ​ ​ ​ ​ ​ ​ 433 ​ ​ 506 ​ ​ Cost of receivables acquired (excluding receivables related to sales) ​ ​ ​ ​ ​ ​ ​ (6,093) ​ (6,513) ​ 48 ​ 66 ​ (6,045) ​ (6,447) 14 ​ ​ Purchases of marketable securities ​ ​ ​ ​ ​ (29) ​ (141) ​ (200) ​ ​ ​ ​ ​ (141) ​ (229) ​ ​ Purchases of property and equipment ​ (352) ​ (362) ​ ​ ​ ​ ​ ​ ​ ​ ​ (352) ​ (362) ​ ​ Cost of equipment on operating leases acquired ​ ​ ​ ​ ​ ​ ​ (454) ​ (503) ​ 15 ​ 49 ​ (439) ​ (454) 15 ​ ​ Decrease in investment in Financial Services ​ ​ ​ ​ ​ 10 ​ ​ ​ ​ ​ ​ ​ (10) ​ ​ ​ ​ 17 ​ ​ Decrease (increase) in trade and wholesale receivables ​ ​ ​ ​ ​ ​ ​ 985 ​ (871) ​ (985) ​ 871 ​ ​ ​ ​ 14 ​ ​ Collateral on derivatives – net ​ ​ ​ ​ ​ ​ ​ ​ (191) ​ ​ 310 ​ ​ ​ ​ ​ ​ ​ ​ (191) ​ ​ 310 ​ ​ Other ​ (51) ​ (33) ​ 4 ​ (10) ​ ​ ​ ​ ​ (47) ​ (43) ​ ​ Net cash provided by (used for) investing activities ​ (394) ​ (342) ​ 2,940 ​ 838 ​ (1,130) ​ 721 ​ 1,416 ​ 1,217 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Flows from Financing Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net proceeds (payments) in short-term borrowings (original maturities three months or less) ​ 176 ​ 78 ​ (1,660) ​ (3,029) ​ ​ ​ ​ ​ (1,484) ​ (2,951) ​ ​ Change in intercompany receivables/payables ​ 1,222 ​ 288 ​ (1,222) ​ (288) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from borrowings issued (original maturities greater than three months) ​ 2,032 ​ 11 ​ 1,136 ​ 5,276 ​ ​ ​ ​ ​ 3,168 ​ 5,287 ​ ​ Payments of borrowings (original maturities greater than three months) ​ (12) ​ (40) ​ (1,741) ​ (3,197) ​ ​ ​ ​ ​ (1,753) ​ (3,237) ​ ​ Repurchases of common stock ​ (441) ​ (1,328) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (441) ​ ​ (1,328) ​ ​ Capital returned to Equipment Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ (10) ​ ​ ​ ​ ​ 10 ​ ​ ​ ​ ​ ​ 17 ​ ​ Dividends paid ​ (403) ​ (386) ​ (162) ​ ​ (233) ​ 162 ​ ​ 233 ​ (403) ​ ​ (386) 13 ​ ​ Other ​ (7) ​ (22) ​ (3) ​ (8) ​ ​ ​ ​ ​ (10) ​ (30) ​ ​ Net cash provided by (used for) financing activities ​ 2,567 ​ (1,399) ​ (3,652) ​ (1,489) ​ 162 ​ 243 ​ (923) ​ (2,645) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash ​ (74) ​ 11 ​ (13) ​ 5 ​ ​ ​ ​ ​ (87) ​ 16 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash ​ (776) ​ (2,249) ​ 50 ​ (71) ​ ​ ​ ​ ​ (726) ​ (2,320) ​ ​ Cash, Cash Equivalents, and Restricted Cash at Beginning of Period ​ 5,643 ​ 5,755 ​ 1,990 ​ 1,865 ​ ​ ​ ​ ​ 7,633 ​ 7,620 ​ ​ Cash, Cash Equivalents, and Restricted Cash at End of Period ​ $ 4,867 ​ $ 3,506 ​ $ 2,040 ​ $ 1,794 ​ ​ ​ ​ ​ ​ ​ $ 6,907 ​ $ 5,300 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Components of Cash, Cash Equivalents, and Restricted Cash ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 4,840 ​ $ 3,467 ​ $ 1,761 ​ $ 1,670 ​ ​ ​ ​ ​ ​ ​ $ 6,601 ​ $ 5,137 ​ ​ Cash, cash equivalents, and restricted cash (Assets held for sale) ​ ​ ​ ​ ​ ​ ​ ​ 116 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 116 ​ ​ ​ ​ ​ Restricted cash (Other assets) ​ ​ 27 ​ ​ 39 ​ ​ 163 ​ ​ 124 ​ ​ ​ ​ ​ ​ ​ ​ 190 ​ ​ 163 ​ ​ Total Cash, Cash Equivalents, and Restricted Cash ​ $ 4,867 ​ $ 3,506 ​ $ 2,040 ​ $ 1,794 ​ ​ ​ ​ ​ ​ ​ $ 6,907 ​ $ 5,300 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 11 Elimination of depreciation on leases related to inventory transferred to equipment on operating leases. 12 Reclassification of share-based compensation expense. 13 Elimination of dividends from financial services to the equipment operations, which are included in the equipment operations operating activities. 14 Primarily reclassification of receivables related to the sale of equipment. 15 Reclassification of direct lease agreements with retail customers. 16 Reclassification of sales incentive accruals on receivables sold to financial services. 17 Elimination of change in investment from equipment operations to financial services. ​ 36 ​ Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See our most recently filed Annual Report on Form 10-K (Part II, Item 7A). There have been no material changes in this information. ​